As filed with the Securities and Exchange Commission on January 3, 1997
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
REGISTRATION STATEMENT
ON FORM S-3
Under
THE SECURITIES ACT OF 1933
LIFE MEDICAL SCIENCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
_________________
14-1745197
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
_________________
379 Thornall Street
Edison, NJ 08837
(908) 494-0444
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S EXECUTIVE OFFICES)
_________________
Robert P. Hickey
Chief Executive Officer and President
Life Medical Sciences, Inc.
379 Thornall Street
Edison, NJ 08837
(908) 494-0444
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
_________________
With a copy to:
Irwin M. Rosenthal, Esq.
Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, NY 10112
(212) 698-7700
_________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier registration statement for the same
offering.
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
Pursuant to Rule 416, there are also being registered such additional shares
as may become issuable pursuant to anti-dilution provisions of certain options
and warrants set forth herein.
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per share.............. 1,612,786 $ 6.53 $10,531,493 $ 3,191.37
==========================================================================================================================
______________
(1) The price of $6.53 per share, which was the average of the high and low
sales price of the Common Stock on the Nasdaq National Market on December
30, 1996, is set forth solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933,
as amended (the "Securities Act").
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
SUBJECT TO COMPLETION, DATED JANUARY 3, 1997
LIFE MEDICAL SCIENCES, INC.
1,612,786 SHARES OF COMMON STOCK
This Prospectus relates to 1,612,786 shares (the "Shares") of common stock,
par value $.001 per share ("Common Stock") of Life Medical Sciences, Inc. (the
"Company") which may be offered for sale from time to time (the "Offering") by
certain selling stockholders (the "Selling Stockholders"). See "Selling
Stockholders and Plan of Distribution."
The Shares may be offered by the Selling Stockholders from time to time in
transactions (which may include block transactions) in the over-the-counter
market, in negotiated transactions, through the writing of options on the Shares
or a combination of such methods of sale, at fixed prices that may be changed,
at market prices prevailing at the time of sale, or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares directly
to purchasers or through broker-dealers that may act as agents or principals.
Such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of Shares for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
The Selling Stockholders and any broker-dealers that act in connection with
the sale of the Shares as principals may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933, as amended (the
"Securities Act") and any commission received by them and any profit on the
resale of the Shares and/or as principals might be deemed to be underwriting
discounts and commissions under the Securities Act. The Selling Stockholders may
agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the Shares against certain liabilities,
including liabilities arising under the Securities Act. Sales of the Shares by
the Selling Stockholders, or even the potential of such sales, could have an
adverse effect on the market price of the Common Stock. There can be no
assurance that Selling Stockholders will be able to sell some or all of the
Shares listed for sale herein.
The Shares offered by this Prospectus may be sold from time to time by the
Selling Stockholders or by transferees, commencing on the date of this
Prospectus. The Company will not receive any of the proceeds from the sales of
the Shares by the Selling Stockholders. The Company has agreed to indemnify the
Selling Stockholders against certain liabilities, including liabilities under
the Securities Act.
The Common Stock is listed on The Nasdaq National Market ("Nasdaq"), under the
symbol "CHAI".
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 6 HEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS __________, 1997
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). All such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at the locations referred to
above and copies of such information can be obtained from the Public Reference
Section of the Commission, Room 1024, 450 Fifth Street, N.W., Washington D.C.
20549, as well as at the Commission's Regional Offices at 7 World Trade Center,
13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Room 1400, Chicago, Illinois 60661-2511. Copies of such material
may be obtained at prescribed rates from the office of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, the
Commission maintains a Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information of
issuers that file electronically with the Commission. The Common Stock is listed
on Nasdaq. Reports, proxy statements and other information concerning the
Company may be inspected at the National Association of Securities Dealers, Inc.
at 1735 K Street, N.W., Washington D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act (together with
all amendments, schedules and exhibits thereto, the "Registration Statement").
This Prospectus omits certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration Statement and
related exhibits for further information with respect to the Company and the
securities offered hereby. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
The Company intends to furnish its security holders with annual reports
containing audited financial statements and such interim unaudited reports as it
deems appropriate.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission by the Company (File No. 0-
20580) are hereby incorporated by reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
(2) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996.
(3) The Company's current report on Form 8-K dated June 20, 1996.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering registered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of the filing of such document.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein) modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. All information
appearing in this Prospectus is qualified in its entirety by information and
financial statements (including the notes thereto) appearing in the documents
incorporated by reference herein, except to the extent set forth in the two
immediately preceding sentences.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner, upon written or
oral request from such person, a copy of any or all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that the Prospectus incorporates). Requests should be directed to Donald W.
Fallon, Life Medical Sciences, Inc., 379 Thornall Street, Edison, New Jersey
08837, telephone number (908) 494-0444.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN
ITS ENTIRETY BY, THE MORE DETAILED INFORMATION IN THIS PROSPECTUS. UNLESS
OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS PROSPECTUS ASSUMES NO
EXERCISE OF ANY OTHER OUTSTANDING WARRANTS OR OPTIONS. CERTAIN STATEMENTS IN
THIS PROSPECTUS CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY,
OR INDUSTRY RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE, OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING: DELAYS IN PRODUCT
DEVELOPMENT; PROBLEMS OR DELAYS WITH CLINICAL TRIALS; FAILURE TO RECEIVE OR
DELAYS IN RECEIVING REGULATORY APPROVAL; LACK OF ENFORCEABILITY OF PATENTS AND
PROPRIETARY RIGHTS; LACK OF REIMBURSEMENT; GENERAL ECONOMIC AND BUSINESS
CONDITIONS; INDUSTRY CAPACITY; INDUSTRY TRENDS; DEMOGRAPHIC CHANGES;
COMPETITION; MATERIAL COSTS AND AVAILABILITY; THE LOSS OF ANY SIGNIFICANT
CUSTOMERS; CHANGES IN BUSINESS STRATEGY OR DEVELOPMENT PLANS; QUALITY OF
MANAGEMENT; AVAILABILITY, TERMS AND DEPLOYMENT OF CAPITAL; BUSINESS ABILITIES
AND JUDGMENT OF PERSONNEL; AVAILABILITY OF QUALIFIED PERSONNEL; CHANGES IN, OR
THE FAILURE COMPLY WITH, GOVERNMENT REGULATIONS; AND OTHER FACTORS REFERENCED IN
THIS PROSPECTUS.
THE COMPANY
The Company is a biotechnology company engaged in the development and
commercialization of innovative and cost-effective medical products for
therapeutic applications. The Company's proposed products are derived from its
two proprietary platform technologies: (i) its in-situ (occurring on or at a
body site) tissue culturing technology, and (ii) its polymer technology. The
Company's strategy is to apply its platform technologies to the development of
multiple products that address unmet therapeutic needs or offer improved, cost-
effective alternatives to current methods of treatment. Products currently under
development focus on wound healing, stimulating hair regrowth, improving the
success rate of autologous fat transplantation and preventing or reducing post-
operative surgical adhesions. The Company's proposed products are in various
stages of clinical trials and preclinical studies.
The Company's in-situ tissue culturing technology utilizes proprietary,
defined, serum-free combinations of nutrients and hormones which, when applied
to the body, promote cell growth by: (i) directly supplying essential components
required for cell growth, (ii) stimulating new blood vessel formation
(angiogenesis) and (iii) increasing the flow of blood through existing vessels
(vasodilation). The Company believes that this technology has therapeutic
potential across a broad range of applications in the area of tissue repair and
preservation including acute and chronic wound healing, stimulating hair
regrowth, reducing hair loss, improving the success rate of autologous fat
transplantation for cosmetic and reconstructive surgeries, treating urinary
stress incontinence, and enhancing the outcome of tissue grafting and certain
surgical procedures.
The Company's polymer technology is based on a proprietary group of polymers.
The Company believes that these polymers display desirable properties which
enable them to be tailored to a wide variety of applications. These properties
include bioresorbability, flexibility, strength and enhanced biocompatibility.
Potential applications for products derived from these polymers are in the
medical area, such as the prevention of post-operative surgical adhesions, as
well as in consumer health and hygiene and industrial areas.
The Company's current development efforts are focused on the following proposed
products:
. Cariel--an in-situ tissue culturing based product for the treatment of
chronic wounds such as venous stasis, diabetic and decubitus (pressure sore)
ulcers and other wounds such as burns. Cariel is applied directly to the
wound site in a gel form. Clinical testing of Cariel for wound healing has
been ongoing since 1992. In one uncontrolled clinical study, wound closure
was accomplished without the use of compression, the current conventional
therapy which requires professional medical care and is burdensome to the
patient. Based on published industry sources, the
3
Company believes that products on the market for the treatment of chronic
wounds generate approximately $3 billion in annual sales in the United States
alone.
. Piliel--an in-situ tissue culturing based product to stimulate hair regrowth
and reduce hair loss. The user applies Piliel directly to the scalp in a
viscous liquid form. A pilot clinical study of Piliel was completed in Israel
in 1995. In this uncontrolled study, investigators observed that Piliel
stimulated hair regrowth. According to industry sources, approximately 33
million males and 19 million females in the United States experience some
form of hair loss.
. Lipoel--an in-situ tissue culturing based product to improve the success of
autologous fat transplantations. Autologous fat transplantations involve the
transplantation of fat tissue from a donor site to a recipient site in the
same individual. Autologous fat transplantations may be used in cosmetic and
reconstructive surgeries as well as for the treatment of urinary stress
incontinence. In 1995, the Company initiated a pilot clinical study of Lipoel
in Israel for reconstructive surgery. Based on observations by clinical
investigators to date, the Company believes that Lipoel-enhanced fat
transplants may provide better cosmetic results, safety advantages and
longer-term benefits than non-Lipoel-enhanced fat transplants and other
current alternative treatments. The Company believes that there are several
significant potential markets for Lipoel.
. Repel--a proprietary resorbable adhesion barrier film based on the Company's
polymer technology. Repel is intended to be used routinely during surgeries
to prevent or reduce the formation of post-operative surgical adhesions. The
Company conducted several preclinical studies of Repel in the United States
in 1995 and 1996. These studies have shown that Repel eliminates or
significantly reduces adhesions following surgery in an animal model.
. Scar Care--an externally worn silicone-based product to be applied to intact
skin for diminishing unsightly scars and associated discomfort. Clinical
trials for this product have been ongoing since 1995. Based on observations
by clinical investigators to date, the Company believes that Scar Care may
diminish the size and discoloration of scars as well as alleviate associated
itching and discomfort.
The Company's product development strategy is to maintain a relatively small
core of scientists and researchers within the Company. The Company currently
conducts substantially all of its research and product development through
arrangements with specialized academic and industrial organizations which
broaden the development capabilities of the Company. The Company's
commercialization strategy is to seek joint venture, licensing or collaborative
arrangements for the manufacturing, marketing and sale of its products.
The Company previously developed and marketed the Sure-Closure System(TM), a
disposable wound closure device. As a result of a strategic decision to focus on
the development and commercialization of its proposed products utilizing its
platform technologies, the Company, in July 1994, sold the Sure-Closure System
to MedChem Products, Inc. In 1996, the Sure-Closure System was acquired by
Zimmer, Inc., a subsidiary of Bristol-Meyers Squibb. The Company receives a 10%
royalty on all net sales of the Sure-Closure System products through June 30,
2004.
The Company has filed intent to use applications with the United States Patent
and Trademark Office for the following trademarks: Cariel, Piliel, Lipoel and
Repel.
4
THE OFFERING(1)
Securities offered........................ 1,612,786 shares of Common Stock by the Selling Stockholders. See
"Description of Securities" and "Selling Stockholders and Plan of
Distribution."
Common Stock outstanding prior to the
Offering.............................. 7,914,820 shares of Common Stock(2)
Common Stock outstanding subsequent
to the Offering....................... 8,314,820 shares of Common Stock.(3)
Risk Factors.............................. Investment in the securities offered hereby is speculative and
involves
a high degree of risk. See "Risk Factors."
NASDAQ National Market Symbol:
Common Stock............................. CHAI
- ---------
(1) The Company will, in the future, be filing a separate post-effective
amendment on Form S-3 to previously filed registration statements relating
to (A) securities registered under the Securities Act pursuant to
Registration Statement No. 33-94008 and not yet issued or sold consisting
of (i) 1,150,000 shares of Common Stock and Redeemable Class B Warrants
(the "Class B Warrants") issuable upon exercise of the Redeemable Class A
Warrants (the "Class A Warrants") issued in the Company's initial public
offering which was declared effective by the Securities and Exchange
Commission (the "Commission") in September 1992 (the "IPO"); (ii) 2,300,000
shares of Common Stock issuable upon exercise of the Class B Warrants
(which Class B Warrants were either issued in the IPO or are issuable upon
exercise of Class A Warrants issued in the IPO); and (iii) approximately
463,123 shares of Common Stock, approximately 109,890 Class A Warrants and
219,780 Class B Warrants underlying the unit purchase option issued to the
underwriter in the IPO, which unit purchase option is exercisable into
approximately 109,890 Units (each consisting of one share of Common Stock,
one Class A Warrant, which is convertible into one share of Common Stock
and one Class B Warrant, and one Class B Warrant, which is convertible into
one share of Common Stock) and (B) securities registered under the
Securities Act pursuant to Registration Statement No. 33-64908 and not yet
issued or sold consisting of 500,000 shares of Common Stock and Class B
Warrants issuable upon exercise of the Class A Warrants issued in the
Company's offering which was declared effective by the Commission in July
1993 (the "Second Offering") and 500,000 shares of Common Stock issuable
upon exercise of the Class B Warrants which are issuable upon exercise of
the Class A Warrants issued in the Second Offering.
(2) Does not include any shares of Common Stock issuable upon the exercise of
any currently outstanding options or warrants.
(3) Assumes the exercise of all securities held by Selling Stockholders
exercisable into shares of Common Stock. Does not include any shares of
Common Stock issuable upon the exercise of currently outstanding options or
warrants which are not held by Selling Stockholders. There is no assurance
that any or all of such securities will ever be exercised. See "Selling
Stockholders and Plan of Distribution."
5
RISK FACTORS
An investment in the securities offered hereby involves a high degree of
risk. In addition to the other information in this Prospectus and the
information incorporated herein by reference, the following risk factors should
be considered carefully by potential purchasers in evaluating an investment in
the securities offered hereby.
RISK THAT TECHNOLOGIES OR PROPOSED PRODUCTS WILL NEVER BE SUCCESSFULLY DEVELOPED
The Company's technologies and proposed products are still under development
and are subject to the risks of failure inherent in the development of new
technologies and products based on new technologies. The Company currently has
no products approved for commercial use and has not yet generated revenues from
the commercialization of products based on its technologies (other than its
former product, the Sure-Closure System). The Company's new technologies and
proposed products will require significant further research, development and
testing, including extensive clinical testing and regulatory approval, prior to
commercial use. Unsuccessful results from clinical trials of the Company's
proposed products or adverse findings with respect to these products could
adversely affect some or all of the Company's proposed products. No assurance
can be given that such proposed products will prove to be safe, efficacious and
non-toxic, receive requisite regulatory approvals, demonstrate substantial
therapeutic benefit, be commercialized on a timely basis, experience no design
or manufacturing problems, be manufactured on a large scale, be economical to
market, be accepted by the marketplace, or generate sufficient revenues to
support future research and development programs. In addition, no assurance can
be given that proprietary rights of third parties will not preclude the Company
from marketing its proposed products or that third parties will not market
superior or equivalent products.
RISKS ASSOCIATED WITH UNCERTAINTIES OF CLINICAL TRIALS
The Company is required to obtain approval from the United States Food and
Drug Administration ("FDA") prior to marketing its proposed therapeutic products
in the United States and the approval of foreign regulatory authorities to
commercialize its proposed products in other countries. To obtain such
approvals, the Company is required to prove the safety and efficacy of its
proposed products through extensive preclinical studies and clinical trials. The
Company is in various stages of such testing. The completion of any of the
Company's clinical trials is dependent upon many factors including the rate of
patient enrollment and the heterogeneity of the patients and indications to be
treated. Delays in patient enrollment, as well as the heterogeneity of patients
and indications to be treated, may result in increased trial costs and delays in
FDA submissions, which could have a material adverse effect on the Company.
A number of companies in the biotechnology and pharmaceutical industries have
suffered significant setbacks in clinical trials, even after showing promising
results in earlier studies or trials. Although the Company has obtained
favorable results to date in preclinical studies and clinical trials of certain
of its proposed products, such results may not be predictive of results that
will ultimately be obtained in or throughout such preclinical studies and
clinical trials. There can be no assurance that the Company will not encounter
problems in its clinical trials that will cause the Company to delay or suspend
its clinical trials, that the clinical trials of its proposed products will be
completed at all, that such testing will ultimately demonstrate the safety or
efficacy of such proposed products or that any proposed products will receive
regulatory approval on a timely basis, if at all. If any such problems occur,
the Company could be materially and adversely affected.
CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING; LOSS ON SALE OR MERGER
Although the Company believes that available cash will be sufficient to meet
its cash requirements for approximately the next 24 months, there can be no
assurance that the Company will not require additional financing during that
time or that financing will be available on acceptable terms or at all.
Following such 24 month period, the Company will be required to raise
substantial additional funds to continue to conduct necessary research and
development, preclinical studies and clinical trials, to commercialize its
proposed products, and to fund the growth that is expected to occur if any of
its proposed products are approved for marketing. The Company plans to seek such
additional funding through collaborative arrangements with strategic partners,
licensing arrangements for certain of its proposed products, and additional
public or private financings, including equity financings. Any additional equity
financings may be dilutive to stockholders, including purchasers of the
securities offered hereby. There can be no assurance that such arrangements or
financings will be available as needed or on terms acceptable to the Company.
Insufficient funds may require the Company to delay, scale back or eliminate
some
6
or all of its research and development programs and manufacturing and marketing
efforts, or require it to license to third parties certain products or
technologies that the Company would otherwise seek to commercialize itself. If
the Company is not able to raise additional funds as needed to continue its
research and development programs and for its intended manufacturing and
marketing efforts, it may become necessary for the Company to attempt to be
merged or sold in whole or in part with or to another entity. There can be no
assurance that such a sale or merger would be available, but if it were, the
proceeds to the Company or its stockholders from such a sale or merger could be
substantially less than the amount invested by stockholders in the Company,
resulting in significant losses to the stockholders on their investment in the
Company's securities.
LIMITED OPERATING HISTORY; HISTORY OF LOSSES
The Company has a limited history of operations that, to date, has consisted
primarily of research, development and testing of its technologies and the
commercialization of the Sure-Closure System. With the exception of the third
quarter of 1994, when the gain on the sale of the Sure-Closure System was
realized, the Company has incurred significant net losses from its inception.
The Company experienced net losses of $6,916,536, $3,398,867, and $2,797,296 for
the years ended December 31, 1993, 1994 and 1995, respectively. At September 30,
1996, the Company had an accumulated deficit of $18,852,632 which has increased
since that date. The Company continues to expend substantial financial and other
resources on (i) research, development and testing of its in-situ tissue
culturing technology and proposed products utilizing this technology; (ii)
research, development and testing of its polymer technology and proposed
products utilizing this technology; (iii) research, development and testing of
other proposed products; and (iv) general and administrative expenses. The
Company expects to incur additional losses as its research, development and
preclinical studies and clinical trials continue to expand. The Company's
ability to achieve a profitable level of operations is dependent on successfully
completing the development of its proposed products, obtaining required
regulatory approvals, and manufacturing and selling its proposed products.
Accordingly, the extent of future losses and the time required to achieve
profitability, if ever, is uncertain. There can be no assurance that the Company
will achieve or sustain a profitable level of operations.
NO ASSURANCE OF REGULATORY APPROVALS; POTENTIAL DELAYS
The Company's proposed products will be subject to regulation by the FDA and
comparable agencies in foreign countries. The regulatory approval process often
takes a number of years and requires the expenditure of substantial funds. In
the United States, the FDA enforces, where applicable, development, testing,
labeling, manufacturing, registration, notification, clearance or approval,
marketing, distribution, recordkeeping and reporting requirements for new drugs,
medical devices, biologics and cosmetics. In addition, there can be no assurance
that government regulations applicable to the Company's products or the
interpretation of those regulations will not change and thereby prevent the
Company from marketing some or all of its products temporarily or permanently.
There can be no assurance that any proposed products that may be developed by
the Company will be able to satisfy the current requirements and regulations of
the FDA or comparable foreign agencies. There can be no assurance that the
Company's proposed products will ever obtain the regulatory clearance or
approval required for marketing. Products currently being developed utilizing
the in-situ tissue culturing technology will likely be regulated as new drugs or
biologic products, each of which faces a substantially more burdensome
regulatory approval process than that applicable to most medical devices.
Products utilizing the Company's polymer technology are likely to be regulated
by the FDA as medical devices.
Whether or not FDA approval has been obtained, approval of a drug by
comparable regulatory authorities in other countries must be obtained prior to
marketing the product in those countries. The approval process varies by country
and the time required may be longer or shorter than that required for FDA
approval. Approval of a drug for sale in one country does not ensure approval in
other countries. The results of Phase I or Phase II studies are not necessarily
indicative of the efficacy or safety of a drug candidate for human therapeutic
use. There can be no assurance that clinical testing will provide evidence of
safety and efficacy in humans or that regulatory approvals will be granted for
any of the Company's products. Manufacturers of therapeutic products are
required to obtain FDA approval of their manufacturing facilities and processes,
to adhere to applicable standards for manufacturing practices and to engage in
extensive recordkeeping and reporting. Failures to obtain or delays in obtaining
regulatory approvals would adversely affect the manufacturing and marketing of
the Company's products, the Company's financial position and the Company's
revenues or royalties. When and if approvals are granted, the Company, the
approved drug, the manufacture of such drug and the facilities in which such
drug is manufactured are subject to ongoing regulatory review. Subsequent
discovery of previously unknown problems may result in restriction
7
on a product's use or withdrawal of the product from the market. Adverse
government regulation that might arise from future legislative or administrative
action, particularly as it relates to healthcare reform and product pricing,
cannot be predicted.
PATENTS AND PROPRIETARY RIGHTS; NO ASSURANCE OF ENFORCEABILITY OR SIGNIFICANT
COMPETITIVE ADVANTAGE
The Company's success will depend heavily on its ability to obtain and retain
patent protection for its in-situ tissue culturing technology, its polymer
technology, and any proposed products, to preserve its trade secrets and to
operate without infringing the proprietary rights of third parties. The Company
owns one United States patent and four pending United States patent applications
relating to its in-situ tissue culturing technology and owns two United States
patents, one Canadian patent and two Israeli patents relating to its polymer
technology. In addition, the Company has filed for patents in a number of
countries and intends to file additional patent applications in other countries.
There can be no assurance that the claims in the pending patent applications
will issue as patents, that any issued patents will provide the Company with
significant competitive advantages, that challenges will not be instituted
against the validity or enforceability of any patent owned by the Company, or,
if instituted, that such challenges will not be successful. The cost of
litigation to uphold the validity and prevent infringement of a patent can be
substantial. Furthermore, there can be no assurance that others will not
independently develop similar or superior technologies, duplicate the Company's
technologies or design around the patented aspects of the Company's
technologies. The Company could incur substantial costs in proceedings before
the United States Patent Office, including interference proceedings. The
proceedings could also result in adverse decisions as to the patentability of
the Company's licensed or assigned inventions. Further, there can be no
assurance that the Company will not infringe upon prior or future patents owned
by others, that the Company will not need to acquire licenses under patents
belonging to others for technology potentially useful or necessary to the
Company, or that such licenses will be available to the Company, if at all, on
terms acceptable to the Company. Moreover, there can be no assurance that any
patent issued to or licensed by the Company will not be infringed by others.
Lastly, there can be no assurance that third parties will not bring suits
against the Company for patent infringement or for declaratory judgment to have
the patents owned or licensed by the Company declared invalid. While obtaining
patents is deemed important by the Company, patents are not considered essential
to the success of its business. However, if further patents do not issue from
present or future patent applications, the Company may be subject to greater
competition. The Company also relies on trade secrets and other unpatented
proprietary technology to protect its innovations. There can be no assurance
that the Company can meaningfully protect its rights in such unpatented
technology, that others will not independently develop substantially equivalent
or superior products and processes or otherwise gain access to the Company's
technologies, that trade secrets will be established or that secrecy obligations
will be honored. To the extent that consultants, key employees, third parties
involved in the Company's projects or others independently develop technological
information, disputes may arise as to the proprietary rights to such
information, which may not be resolved in favor of the Company.
The Company seeks to protect its trade secrets and proprietary know-how, in
part, through confidentiality agreements with its employees, consultants,
advisors, collaborators and others. There can be no assurance that these
agreements will not be violated by the other parties, that the Company will have
adequate remedies for any breach, or that the Company's trade secrets will not
otherwise become known or be independently developed by competitors. The Company
has relationships with a number of consultants who are employed by organizations
other than the Company. These persons may have consulting, employment or
advisory arrangements with other entities that may conflict or compete with
their obligations to the Company. Consultants generally sign agreements that
provide for confidentiality of the Company's proprietary information and results
of studies. There can be no assurance, however, that the Company will, in
connection with every relationship, be able to maintain the confidentiality of
the Company's technology, dissemination of which could have a materially adverse
effect on the Company's business. To the extent that the Company's scientific
consultants develop inventions or processes independently that may be applicable
to the Company's proposed products, disputes may arise as to the ownership of
the proprietary rights to such information. Such inventions or processes will
not necessarily become the property of the Company, but may remain the property
of such persons or their full-time employers. The Company could be required to
make payments to the owners of such inventions or processes, either in the form
of cash, equity or a combination thereof. In addition, protracted and costly
litigation may be necessary to enforce and determine the scope and validity of
the Company's proprietary rights.
8
POTENTIAL DEPENDENCE ON REIMBURSEMENT
Successful commercialization of the Company's proposed products may depend in
part on the availability of adequate reimbursement from third-party health care
payors such as Medicare, Medicaid, and private insurance plans. Reimbursement
matters include both coverage issues and payment issues. Questions of coverage
raise the issue of whether a product will be paid for at all and under what
circumstances. Questions of payment relate to the amount or level of payment.
Reimbursement policies vary among payors and may depend on the setting in which
a product is used.
There are numerous governmental third-party payors. Medicare is a federally
funded health insurance for persons age 65 or older, who have end stage renal
disease, or otherwise qualify by virtue of a disability. Medicare is the largest
single health insurance program in the United States. Medicaid is a joint
federal-state welfare program to provide health services to the indigent. The
Department of Veterans Affairs provides a variety of medical services to
veterans both directly and through arrangements with private health care
providers. The Civilian Health and Medical Program for the Uniformed Services
pays for care and services furnished to dependents of members of the armed
forces. There are also numerous private health insurance plans, including
private nonprofit insurers (e.g., Blue Cross and Blue Shield plans), commercial
insurers, and various types of managed care organizations.
Significant uncertainty exists as to the reimbursement status of newly
approved health care products. There can be no assurance that adequate third-
party reimbursement will be available for the Company to establish and maintain
price levels sufficient for realization of an appropriate return on its
investment in developing new therapies. Government and other third-party payors
are increasingly attempting to contain health care costs by limiting both
coverage and payment levels for new therapeutic products approved for marketing
by the FDA and by refusing, in some cases, to provide any coverage for uses of
approved products for disease indications for which the FDA has not granted
marketing approval. If adequate coverage and payment levels are not provided by
government and third-party payors for the Company's proposed products, the
market acceptance of these products would be adversely affected. Failure of the
Company's proposed products to be adequately reimbursed by third-party payors
could have a material adverse effect on the Company.
UNCERTAIN MARKET ACCEPTANCE OF PROPOSED PRODUCTS OR THE SURE-CLOSURE SYSTEM
The Company's future growth and profitability will depend, in large part, on
the acceptance by the medical community of the Company's proposed products. This
acceptance will be substantially dependent on educating the medical community as
to the full capabilities, distinctive characteristics, perceived benefits and
clinical efficacy of the Company's proposed products. There can be no assurance
that the Company's efforts or those of others will be successful or that any of
the Company's proposed products will receive the necessary market acceptance.
Failure of the Company's proposed products to gain market acceptance would have
a material adverse effect on the Company. In addition, part of the Company's
future profitability will depend on the acceptance by the medical community of
the Sure-Closure System since the Company receives royalties from sales of this
product.
RISK OF NOT OBTAINING MANUFACTURING FACILITY AND EXPERIENCED MANUFACTURING
PERSONNEL AND/OR ESTABLISHING MANUFACTURING ARRANGEMENTS WITH OTHERS
The Company believes it currently has contracted for sufficient manufacturing
capabilities to allow for production of Cariel, Piliel and Repel in quantities
sufficient to support its current clinical programs. The Company intends to seek
out contracts to obtain sufficient manufacturing capabilities to allow for
production of its other proposed products in quantities sufficient to support
its anticipated needs. To be successful, however, the Company must be capable of
manufacturing or contracting for the manufacture of its products in commercial
quantities, in compliance with regulatory requirements and at acceptable costs.
While the Company has pilot scale manufacturing experience, the Company has no
experience in large scale commercial manufacturing. The Company may enter into
contractual arrangements to manufacture its proposed products at such time, if
ever, that such products are successfully developed. There can be no assurance
that the Company will be able to enter into any such arrangements on acceptable
terms, or at all, or that any manufacturer will be able to meet any demand for
such products on a timely basis. The Company may manufacture its proposed
products directly at such time, if ever, that such products are successfully
developed. The Company has no experience with the direct manufacture of these
proposed products although certain of the Company's officers have had experience
in similar activities for other companies. The manufacture of these proposed
products is complex and difficult, and will require the Company to attract and
retain experienced manufacturing personnel and to obtain the use of a
manufacturing facility in compliance with FDA and other
9
regulatory requirements. There can be no assurance that experienced personnel
can be attracted to or retained by the Company, or that the Company will be able
to obtain the financing necessary to manufacture these products directly.
DEPENDENCE UPON SUPPLIERS
The Company is dependent upon subcontractors to manufacture and deliver
certain components of its proposed products in a timely and satisfactory manner.
Failure to procure such components or any interruption in the supply of such
components could have a materially adverse effect on the Company.
RELIANCE ON ARRANGEMENTS WITH OTHERS; LIMITED MARKETING AND SALES EXPERIENCE
The Company has limited experience in marketing and sales although certain of
the Company's officers have had experience in similar activities for other
companies. If any of the Company's proposed products are successfully developed,
the Company may rely on joint venture, licensing or collaborative arrangements
for marketing and selling such proposed products in certain geographic markets.
No agreements have been entered into and there can be no assurance that the
Company will be successful in establishing such arrangements, or that its co-
venturer, licensee or collaborator in such arrangements will be successful in
marketing and selling such products. These arrangements may result in the lack
of control by the Company over the marketing and selling of its proposed
products. The Company may choose to market and sell such products directly and,
to do so, the Company would have to develop a specialized marketing and sales
force with technical expertise. There can be no assurance that the Company will
be able to build such a marketing or sales force, that the cost of establishing
such a marketing or sales force will not exceed any product revenues, or that
the Company's direct sales and marketing efforts will be successful. In
addition, the Company will compete with many other companies that currently have
extensive and well-funded marketing and sales operations.
RISK OF TERMINATION OF, OR LOSS OF RIGHTS TO, TECHNOLOGIES UNDER AGREEMENTS WITH
OTHERS
The Company has acquired the rights to its technologies pursuant to
agreements with research institutions. Such agreements contain provisions
requiring the Company, among other things, to develop, commercialize and/or
market products, to achieve minimum sales and/or income levels within certain
periods of time, to meet minimum funding requirements and to make royalty
payments in order to maintain the patents and other rights granted thereunder.
In addition, the patents and proprietary rights revert to the grantor on certain
dates and/or upon the occurrence of certain conditions. In the event that
certain patents and proprietary rights were to revert to the grantor, the
Company would be materially adversely affected.
DEPENDENCE UPON THIRD PARTIES FOR CLINICAL DEVELOPMENT OF PROPOSED PRODUCTS
The Company may enter into strategic alliances for the clinical development
of certain of its proposed products. There can be no assurance that the Company
will be successful in obtaining satisfactory agreements with strategic partners.
In addition, there can be no assurance that the interests and motivations of any
strategic partner would be or remain consistent with those of the Company or
that such partner would successfully perform its obligations.
COMPETITION AND TECHNOLOGICAL OBSOLESCENCE
The Company is engaged in rapidly evolving and highly competitive fields.
Competition from biotechnology companies, medical device manufacturers,
pharmaceutical and chemical companies and other competitors is intense. Many of
these companies have substantially greater capital resources, research and
development staffs, facilities, and experience in obtaining regulatory approvals
than the Company as well as substantially more experience than the Company in
the manufacturing, marketing, and sale of products. Academic institutions,
hospitals, governmental agencies and other public and private research
organizations are also conducting research and seeking patent protection and may
develop competing products or technologies on their own or through joint
ventures. In addition, recently developed technologies or technologies that may
be developed in the future are, or may be, the basis for competitive products.
There can be no assurance that the Company's competitors will not succeed in
developing technologies and products that are more effective and/or less costly
than those being developed by the Company thereby rendering the Company's
technologies not competitive or obsolete. The Company's proposed products may
become obsolete before the Company can obtain approval to market them or before
it can recoup
10
related research and development or commercialization expenses. Competitors may
also be more successful than the Company in production and marketing.
The Company believes that its competitive position will be based on its
ability to create and maintain scientifically advanced technology and
proprietary products, obtain required government approvals on a timely basis,
develop and manufacture its proposed products on a cost-effective basis and
successfully market its products. There can be no assurance that the Company's
proposed products under development will be able to compete successfully with
existing products or products under development by other companies, universities
and other institutions or that they will attain regulatory approval in the
United States or elsewhere.
UNCERTAINTY RELATED TO HEALTH CARE REFORM MEASURES
Congress recently has considered several Medicare reform proposals that could
significantly affect the amount of payment for pharmaceutical products,
including the Company's proposed products. For example, Congressional proposals
would implement a prospective payment system for home health services. If
enacted, such proposals could create cost pressures similar to those in
Diagnostic Related Group--based payments for inpatient hospital services.
Pending legislative proposals would also replace the current Medicaid program
with a "MediGrant" program involving federal block grants to states. If such
legislation were enacted, it could reduce Medicaid payments for the Company's
proposed products. It is uncertain what legislative proposals will be enacted or
what actions federal, state, or private payors may take in response to any
health reform legislation. The Company cannot predict the effect health care
reforms may have on its business, and no assurance can be given that any such
reforms will not have a material adverse effect on the Company.
ANTI-KICKBACK AND FRAUD AND ABUSE LAWS
Several types of state and federal laws have been applied to restrict certain
marketing practices in the pharmaceutical industry in recent years. These
include anti-kickback statutes and consumer protection laws prohibiting unfair
or deceptive trade practices.
The federal Medicare/Medicaid anti-kickback statute prohibits persons from
knowingly and willfully offering, paying, soliciting, or receiving remuneration
to induce or in return for purchasing, leasing, ordering, or arranging for or
recommending purchasing, leasing or ordering any service or item payable under
Medicare, Medicaid, or certain other federally funded state health care
programs. These provisions have been broadly interpreted to apply to certain
relationships between manufacturers, prescribers, purchasers of manufacturers'
products, and parties, such as pharmacies, in a position to refer or recommend
purchases.
There are five statutory exceptions to the basic prohibition against
kickbacks. Such protected practices include properly disclosed discounts or
other reductions in price, payments to bona fide employees, payments to group
purchasing organizations, waivers of coinsurance for Medicare Part B services
for certain individuals who qualify for certain Public Health Service programs,
and payment practices set forth in regulations defining conduct that will not be
subject to enforcement (i.e., the "safe harbors"). The federal safe harbor
regulations contain further refinements of the statutory exceptions, and also
contain safe harbors for, among other things, warranties, personal services
contracts, and reductions in prices to health plans by contract health care
providers. Although failure to satisfy all of the criteria for a particular safe
harbor does not necessarily mean that an arrangement is unlawful, practices that
involve remuneration intended to induce prohibited purchases or recommendations
may be subject to scrutiny if they do not qualify for the safe harbor. The
Company's practices may not in all cases meet all of the criteria for safe
harbor protection from anti-kickback liability.
Several states also have statutes or regulations similar to the federal
Medicare/Medicaid anti-kickback statute, including some laws which apply
regardless of whether payment for the services in question may be made under
Medicare, Medicaid, or state health programs. A number of states also have
recently sought to regulate pharmaceutical promotion--and particularly
manufacturer-sponsored incentives to promote the utilization of their products--
through state consumer protection statutes.
Because of the breadth of these statutes, it is possible that some of the
Company's business activities could be subject to challenge under one or more of
such laws.
11
RISK OF USING HAZARDOUS MATERIALS
Medical and biopharmaceutical research and development involves the
controlled use of hazardous materials. The Company is subject to federal, state
and local laws and regulations governing the use, manufacture, storage, handling
and disposal of such materials and certain waste products. Although the Company
believes that all of its current contractors comply and future contractors will
comply with safety procedures for handling and disposing of such materials under
the standards prescribed by federal, state and local regulations, the risk of
accidental contamination or injury from those materials cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages that result and any such liability could exceed the resources of
the Company. Although the Company believes that it is in compliance in all
material respects with applicable environmental laws and regulations and
currently does not expect to make material capital expenditures for environment
control facilities in the near-term, there can be no assurance that the Company
will not be required to incur significant costs to comply with environmental
laws and regulations, or any assurance that the operations, business or assets
of the Company will not be materially adversely affected by current or future
environmental laws, rules, regulations or policies.
DEPENDENCE UPON ATTRACTION AND RETENTION OF KEY PERSONNEL AND CONSULTANTS
The Company is dependent upon a limited number of key management, scientific
and technical personnel. In addition, the Company's future success will depend
in part upon its ability to attract and retain highly qualified personnel. The
Company competes for such personnel with other companies, academic institutions,
government entities and other organizations. There can be no assurance that the
Company will be successful in hiring or retaining qualified personnel. Loss of
key personnel or the inability to hire or retain qualified personnel could have
a material adverse effect on the Company. In addition, the Company relies upon
consultants and advisors to assist the Company in formulating its research and
development strategies, testing and manufacturing-related issues. All of the
Company's consultants and advisors are employed outside the Company and may have
commitments or consulting or advisory contracts with other entities.
RISK OF PRODUCT LIABILITY CLAIMS; INSURANCE
The Company's business exposes it to potential liability risks that are
inherent in the testing, manufacturing and marketing of medical products. The
use of the Company's proposed products in clinical trials may expose the Company
to product liability claims and possible adverse publicity. These risks also
exist with respect to the Company's proposed products, if any, that receive
regulatory approval for commercial sales. The Company currently has limited
product liability insurance coverage for the use of Cariel, Piliel, Repel and
Scar Care in clinical trials. The Company does not have product liability
insurance for the clinical trials of other proposed products or for the
commercial sale of any of its proposed products, although it intends to obtain
such coverage if and when its products are commercialized. However, there can be
no assurance that the Company will be able to obtain additional insurance
coverage at acceptable costs, if at all, or be able to maintain the current
level of insurance. Further, there can be no assurance that a product liability
claim would not materially adversely affect the Company. A product liability or
other judgment against the Company in excess of the Company's insurance coverage
could have a material adverse effect upon the Company.
RISK INHERENT IN INTERNATIONAL SALES AND OPERATIONS
The Company intends to sell its proposed products outside of the United
States, as well as domestically. A number of risks are inherent in international
transactions. International sales and operations may be limited or disrupted by
the imposition of governmental controls, regulation of medical devices and other
medical products, export license requirements, political instability, trade
restrictions, changes in tariffs, exchange rate fluctuations and difficulties in
managing international operations.
ANTI-TAKEOVER PROVISIONS
The Company's Restated Certificate of Incorporation, as amended (the
"Restated Certificate of Incorporation") authorizes the issuance of a maximum of
5,000,000 shares of preferred stock ("Preferred Stock") on terms that may be
fixed by the Company's Board of Directors without further stockholder action.
The terms of any series of Preferred Stock could
12
adversely affect the rights of holders of the Common Stock. No Preferred Stock
has been issued to date and the Company has no current plans to issue Preferred
Stock. The issuance of Preferred Stock could make the possible takeover of the
Company more difficult or otherwise dilute the rights of holders of the Common
Stock and the market price of the Common Stock. In addition, the Company is
subject to Delaware General Corporation Law provisions that may have the effect
of discouraging persons from pursuing a non-negotiated takeover of the Company
and preventing certain changes of control.
SHARES ELIGIBLE FOR FUTURE SALE; OUTSTANDING WARRANTS AND OPTIONS; REGISTRATION
RIGHTS
Of the Company's 7,914,820 shares of Common Stock currently outstanding,
3,020,658 shares are "restricted securities," as defined in Rule 144 of the
Securities Act. Of the 3,020,658 "restricted securities," 1,212,786 shares are
being registered for resale in the Offering and all 3,020,658 shares of Common
Stock are or will be eligible for sale under Rule 144. The Company is unable to
predict the effect that sales made under Rule 144, or otherwise, may have on the
then prevailing market price of the Common Stock. Any substantial sale of
restricted securities pursuant to Rule 144 may have an adverse effect on the
market price of the Common Stock. 1,133,851 shares of Common Stock issuable upon
exercise of stock options have been registered on a registration statement on
Form S-8.
The Company has outstanding (i) Class A Warrants and Class B Warrants which
could result in the issuance of 4,768,059 additional shares of Common Stock,
(ii) 775,000 shares of Common Stock issuable upon exercise of options which have
been granted under the Company's Option Plan (the "Plan"), and (iii) 558,851
shares of Common Stock issuable upon exercise of currently outstanding options
granted outside the Plan, of which 200,000 shares of Common Stock issuable upon
exercise of such options are being registered in the Offering. In connection
with the Company's IPO the Company issued Unit Purchase Options ("UPO") to the
underwriter of the IPO which UPO's are convertible into 463,123 shares of Common
Stock, 109,890 Class A Warrants and 219,780 Class B Warrants. In connection with
a recent public offering (the "Third Offering"), the Company sold to Wedbush
Morgan Securities, Inc. a warrant the ("Wedbush Warrant") to purchase 200,000
shares of Common Stock. Such warrant is exercisable for a period of five years,
commencing May 3, 1997 and has an exercise price of $7.95 per share. The Common
Stock underlying the Wedbush Warrant is being registered for resale in the
Offering, and the Company also intends to register the Common Stock underlying
the UPOs for resale. The foregoing options and warrants are likely to be
exercised at a time when the Company might be able to obtain additional equity
capital on more favorable terms. In addition, to the extent they are exercised,
they will decrease the percentage of the Company owned by the Company's
stockholders. While these options and warrants are outstanding, they may
adversely affect the terms on which the Company could obtain additional capital.
The Company cannot predict the effect, if any, that market sales of Common
Stock, the exercise of options or warrants or the availability of such Common
Stock for sale will have on the market price prevailing from time to time. In
addition, if the exercise price of options or warrants are adjusted downward,
such options or warrants may be exercised sooner than otherwise with a resulting
increase in the number of shares of Common Stock available for sale on the
market.
POSSIBLE VOLATILITY OF STOCK PRICE
The stock market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. In addition, the market price of the Common Stock has been
and is likely to continue to be highly volatile. Factors such as fluctuations in
the Company's operating results, shortfalls in revenue or earnings from levels
expected by securities analysts, announcements of technological innovations or
new products by the Company or its competitors, governmental regulations,
developments with respect to patents or proprietary rights, litigation, public
concern as to the safety of products developed by the Company or others and
general market conditions may have a significant adverse effect on the market
price of the Common Stock. Between the date of the IPO and the date of this
Prospectus, the Common Stock has traded at per share prices between $1.50 and
$11.38. There can be no assurance that this high level of volatility will not
persist in the future.
RISK OF NO DIVIDENDS
The Company has never declared or paid any cash dividends on the Common
Stock. There is a risk that the Company may never declare or pay any dividends
on the Common Stock.
13
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by the
Selling Stockholders.
DESCRIPTION OF THE COMMON STOCK
The Company has authorized 23,750,000 shares of Common Stock, par value $.001
per share. Immediately prior to the Offering, there were 7,914,820 shares of
Common Stock outstanding. The holders of the Common Stock are entitled to one
vote per share with respect to all matters on which holders of the Common Stock
are entitled to vote.
Holders of the Common Stock have the right to dividends from funds legally
available therefor, when, as and if declared by the Board of Directors, are
entitled to share ratably in all of the assets of the Company available for
distribution to holders of shares of Common Stock and do not have preemptive,
subscription, or conversion rights. There are no redemption or sinking fund
provisions for the benefit of the Common Stock in the Restated Certificate of
Incorporation. All outstanding shares of Common Stock are, and those shares of
Common Stock offered hereby issuable upon exercise of options or warrants will
be, validly issued, fully paid and non-assessable.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
The Shares may be offered by the Selling Stockholder from time to time in
transactions (which may include block transactions) in the over-the-counter
market, in negotiated transactions (including, without limitation, equity
security exchanges), through the writing of options on the Shares or a
combination of such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares directly
to purchasers or through broker-dealers that may act as agents or principals.
Such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders and/or the purchasers
of Shares for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
The Selling Stockholders and any broker-dealers that act in connection with
the sale of the Shares as principals may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act and any commission received
by them and any profit on the resale of the Shares and/or as principals might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Selling Stockholders may agree to indemnify any agent, dealer or broker-
dealer that participates in transactions involving sales of the Shares against
certain liabilities, including liabilities arising under the Securities Act.
Sales of the Shares by the Selling Stockholders, or even the potential of such
sales, could have an adverse effect on the market price of the Common Stock.
There can be no assurance that Selling Stockholders will be able to sell some or
all of the Shares listed for sale herein.
The following table sets forth certain information with respect to the
Selling Stockholders for whom the Company is registering the Shares for resale
to the public. The Company will not receive any of the proceeds from the sale of
the Shares. There are no material relationships between any of the Selling
Stockholders and the Company except as otherwise indicated. Beneficial ownership
of the Shares by each Selling Stockholder after the sale will depend on the
number of Shares sold by each Selling Stockholder. The Shares offered by the
Selling Stockholders are not being underwritten.
Beneficial Ownership After Offering
Beneficial Ownership Prior to Offering if Maximum is Sold
-------------------------------------- Maximum ------------------
Name of Amount to be
Selling Stockholder Amount Percent Sold Amount Percent
- ------------------ ------ ------- ---- ------ -------
Harold C. Baldauf 363,636 4.2% 363,636 0 0%
Marathon Investments LLC 545,455 6.3% 545,455 0 0%
Thieme Consulting, Inc. 20,000 * 20,000 0 0%
Irwin M. Rosenthal(1) 795,825(2)(3) 9.2% 67,804 728,021(2)(3) 8.4%
Miriam Gold(4) 109,919 1.3% 53,669 56,250 *
Dr. Herbert Moskowitz(1) 1,215,157(3)(5) 14.0% 140,000 1,075,157(3)(5) 12.4%
Walworth Financial Ser- 22,222 * 22,222 0 0%
vices, Inc. Defined
Benefit Trust(6)
14
Beneficial Ownership After Offering
Beneficial Ownership Prior to Offering if Maximum is Sold
-------------------------------------- Maximum ------------------
Name of Amount to be
Selling Stockholder Amount Percent Sold Amount Percent
- ------------------ ------ ------- ---- ------ -------
Wedbush Morgan 200,000(7) 2.3% 200,000 0 0%
Securities, Inc.
Dimotech(8) 100,000(9) 1.2% 100,000 0 0%
Ella Lindenbaum(10) 50,000(9) * 50,000 0 0%
Bernard Hirshowitz(10) 25,000(9) * 25,000 0 0%
Yaron Har-shai(10) 25,000(9) * 25,000 0 0%
________________
* Less than 1%.
(1) Is a director of the Company.
(2) Includes 50,000 shares of Common Stock issuable upon exercise of an option
which is currently exercisable.
(3) Dr. Moskowitz and Mr. Rosenthal are each officers, directors and principal
stockholders of Magar Inc. (a private investment firm which from September
1992 to December 1994 provided management consulting services to the
Company) and own approximately 47% and 16.5%, respectively, of the
outstanding stock of such corporation. As such, these individuals may be
considered to beneficially own, and to have shared investment and voting
power with respect to, all 677,500 shares of Common Stock owned by Magar
Inc. Information relating to shares owned by each of these individuals
assumes that each beneficially owns all shares of Common Stock owned of
record by Magar Inc. 410,000 shares of Common Stock owned by Magar, Inc.
are pledged by Magar, Inc. to a bank as security for a loan to Magar Inc.
Magar Inc. has the sole right to vote such shares, unless there is an event
of default under the loan. In the event of a default by Magar Inc., the
bank would have the right to dispose of the shares.
(4) Is married to Joel Gold, a director of the Company. Excludes 50,000 shares
of Common Stock issuable upon exercise of options granted to Mr. Gold which
are currently exercisable as to which shares of Common Stock Ms. Gold
disclaims beneficial ownership.
(5) Includes shares of Common Stock issuable upon exercise of 49,110 Class A
Warrants and 49,110 Class B Warrants, and 49,100 Class B Warrants issuable
upon exercise of the Class A Warrants which may be exercised at any time up
to September 22, 1998 into an additional 157,860 shares of Common Stock.
Also includes 150,000 shares of Common Stock issuable upon exercise of an
option which is currently exercisable.
(6) Is controlled by Mr. Edward Celano, a director of the Company.
(7) Issuable upon exercise of the Wedbush Warrants which become exercisable in
May 1997, which warrants have an exercise price of $7.95 per share.
(8) Is a wholly-owned subsidiary of Technion Research & Development Foundation
Ltd., from which the Company acquired certain of its technology.
(9) Issuable upon exercise of options, which options have an exercise price of
$9.12 per share.
(10) Is a Research Consultant to the Company.
All expenses of this registration will be borne by the Company.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the securities
offered hereby will be passed upon for the Company by Rubin Baum Levin Constant
& Friedman, New York, New York. Irwin M. Rosenthal, a partner of Rubin Baum
Levin Constant & Friedman is a stockholder and a Director of the Company and is
the beneficial owner of 795,825 shares of Common Stock of the Company, of which
677,500 shares of Common Stock are owned of record by Magar, Inc. Other
attorneys associated with Rubin Baum Levin Constant & Friedman own less than one
percent of the Common Stock.
EXPERTS
The financial statements of the Company included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, incorporated by
reference in this Prospectus, have been audited by Richard A. Eisner & Company,
LLP, independent auditors, as indicated in their report with respect thereto,
and are incorporated herein by reference in reliance upon the report of said
firm given upon their authority as experts in accounting and auditing.
15
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY BY ANYONE
ANY OF THE SECURITIES COVERED BY THIS PROSPECTUS IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
Page
----
Available Information.......................... 2
Documents Incorporated by Reference............ 2
Prospectus Summary............................. 3
Risk Factors................................... 6
Use of Proceeds................................ 14
Description of The Common Stock................ 14
Selling Stockholders and Plan of Distribution.. 14
Legal Matters.................................. 15
Experts........................................ 15
LIFE MEDICAL
SCIENCES, INC.
1,612,786 SHARES OF COMMON STOCK
-----------------------------
PROSPECTUS
-----------------------------
__________, 1997
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses expected to be incurred in
connection with the issuance and distribution of the securities being
registered.
SEC Registration........................... $ 3,191.37
Printing and Engraving*.................... $10,000.00
Legal Fees and Expenses*................... $25,000.00
Accounting Fees*........................... $ 5,000.00
Miscellaneous*............................. $ 6,808.63
Total................................ $50,000.00
==========
- -----------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 145 of the Delaware General Corporation Law (the
"DGCL"), Article TENTH of the Registrant's Restated Certificate of
Incorporation, as amended (Exhibit 3.1 and 3.1(a)), Article VIII of the
Registrant's By-Laws (Exhibit 3.2) and the Indemnification Agreements entered
into with certain of the Registrant's directors and officers (Exhibit 10.5).
Section 145 of the DGCL generally provides that a corporation is empowered to
indemnify any person who is made a party to any threatened, pending or completed
action, suit or proceeding by reason of the fact that he is or was a director,
officer, employee or agent of the corporation or is or was serving, at the
request of the corporation, in any of such capacities of another corporation or
other enterprise, if such director, officer, employee or agent acted in good
faith and in a manner he reasonably believed in or not opposed to the best
interests of the corporation, and with, respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. This
statute describes in detail the right of the Registrant to indemnify any such
person.
Article TENTH of the Restated Certificate of Incorporation of the Registrant,
provides generally for mandatory indemnification of the directors and officers
of the Registrant to the fullest extent permitted under the DGCL and permits
indemnification for all other persons whom the Registrant is empowered to
indemnify under the DGCL.
Pursuant to Article VIII of the Registrant's By-Laws, the Registrant may
indemnify, to the fullest extent permitted by the DGCL, any person, including
officers and directors, with regard to any action or proceeding.
The Registrant has entered into an indemnification agreement with certain of
its directors and officers. Such agreement provides that the Registrant will
indemnify the indemnitee to the fullest extent permitted by applicable law
against expenses, including reasonable attorneys' fees, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any civil or criminal action or administrative proceeding
arising out of his performance of his duties as a director or officer of the
Registrant other than an action initiated by a director or officer. Such
indemnification is available if the indemnitee acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Registrant, and with respect to any criminal action, had no reasonable cause
to believe his conduct was unlawful.
Under such indemnification agreement, the entitlement of a director or
officer to indemnification is determined by a majority vote of a quorum of
disinterested directors, or if such quorum either is not obtainable or so
directs, by independent counsel or by the stockholders or the Registrant, as
determined by such quorum of disinterested directors. Under certain
circumstances, a party to the indemnification agreement is conclusively presumed
to have met the applicable statutory standard of conduct unless the Registrant's
Board of Directors, stockholders or independent legal counsel determine that the
relevant standard has not been met. If a change of control of the Registrant has
occurred, the entitlement of such director or officer to indemnification is
determined by independent counsel selected by such director or officer, unless
such director
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or officer requests that either the Board of Directors or the stockholders make
such determination. The Company currently has $2,000,000 of Director and Officer
liability insurance.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. See Item 17.
"Undertakings."
ITEM 16. EXHIBITS.
(a) Exhibits
3.1 Restated Certificate of Incorporation of Registrant, filed December 26,
1991, as amended.(1)
3.1(a) Amendment to Restated Certificate of Incorporation, dated August 21,
1992.(1)
3.2 By-Laws of Registrant.(1)
5.1 Opinion of Rubin Baum Levin Constant & Friedman regarding legality.*
10.1 Amended and Restated 1992 Stock Option Plan of Registrant.(2)
10.2 Agreement, dated June 14, 1991, between Registrant and Yissum Research
Development Company of the Hebrew University of Jerusalem ("Yissum").(1)
10.3 Lease and Lease Agreement, dated as of May 27, 1992, between Registrant
and Carnegie 214 Associates Limited Partnership (the "Lease").(1)
10.4 Letter, dated July 21, 1992, relating to the commencement date of the
Lease.(1)
10.5 Form of Indemnification Agreement entered into between Registrant and
certain officers and directors of Registrant.(2)
10.6 Agreement, dated June 1991, between Registrant and the Technion Research
and Development Foundation, Ltd. (the "Technion") as assigned by the
Technion to Dimotech Ltd.(1)
10.7 Agreement, dated as of April 14, 1992, between Registrant and Mr. Joel
Gold.(1)(3)
10.8 Assignment of rights relating to a patent on wound dressing to
Registrant by Dimotech.(4)
10.9 Assignment of certain rights relating to the polymer technology to
Registrant by Yissum.(4)
10.10 Supplemental Assignment of rights relating to the in-situ tissue
culturing technology to Registrant by the Technion.(5)
10.11 Form of Non-Qualified Stock Option Agreement.(3)(5)
10.12 Form of Incentive Stock Option Agreement.(3)(5)
10.13 Asset Purchase Agreement between Registrant and MedChem Products, Inc.
dated as of July 29, 1994.(6)
10.14 Stock Option Agreement, dated October 26, 1994, between Registrant and
Edward J. Quilty.(3)(7)
10.15 Underwriting Agreement between Registrant and D.H. Blair Investment
Banking Corp.(8)
10.16 Unit Purchase Option between Registrant and D.H. Blair Investment
Banking Corp.(8)
10.17 Amendment, dated October 28, 1993, to Lease and Lease Agreement, dated
as of May 27, 1992, between Registrant and Carnegie 214 Associates
Limited Partnership.(8)
10.18 Estoppel Certificate, dated December 22, 1993, to Amendment to lease,
dated October 28, 1993, for lender to leased premises, State Mutual Life
Assurance Company of America.(8)
10.19 Agreement, dated as of February 3, 1994, between Registrant and Dimotech
Ltd.(8)
10.20 Warrant Agreement among Registrant, D. H. Blair Investment Banking Corp.
and American Stock Transfer & Trust Company including forms of Class A
and Class B Warrants.(8)
10.21 Warrant Agreement among Registrant and American Stock Transfer and Trust
Company.(8)
10.22 Agreement, dated as of February 1994, between Registrant and Yissum.(8)
10.23 M/A Agreement, dated September 22, 1992, between Registrant and D. H.
Blair Investment Banking Corp.(8)
10.24 Stock Option Agreement, dated as of December 13, 1993, between
Registrant and Dimotech, Ltd.(8)
10.25 Employment Agreement dated June 12, 1995 between Registrant and Dr. Eli
Pines.(9)
10.26 Employment Agreement dated June 12, 1995 between Registrant and Donald
W. Fallon.(10)
10.27 Amendment No. 2 dated as of January 1, 1996 to the Agreement between the
Registrant and Yissum.(2)
10.28 Agreement dated July 16, 1995 between the Registrant and Dimotech.(2)
10.29 Amendment No. 2 dated February 11, 1996 to the Agreement between the
Registrant and Dimotech.(2)
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10.30 Option Agreement dated March 21, 1995 between Registrant and Herbert
Moskowitz.(2)
10.31 Option Agreement dated March 21, 1995 between Registrant and Irwin
Rosenthal.(2)
10.32 Assignment of rights relating to a patent for treatment of Keloid and
Hyetropic scars to Registrant from Dimotech.(2)
10.33 Form of Registration Rights Agreement between Registrant and each of
Irwin Rosenthal, Herbert Moskowitz and Miriam Gold.(2)
10.34 Subscription Agreement dated April 23, 1995 between Registrant and
Marathon Investment, LLC.(2)
10.35 Subscription Agreement dated April 23, 1995, between Registrant and
Harold C. Baldauf.(2)
10.36 Form of Warrant Agreement between Registrant and Wedbush Morgan
Securities(2)
10.37 Employment Agreement dated May 29, 1996 between Registrant and Robert P.
Hickey.(11)
10.38 Employment Agreement dated May 30, 1996 between Registrant and Dr.
Herbert Moskowitz.(11)
10.39 Lease Agreement dated August 13, 1996 between Registrant and Metro Four
Associates, LP, 8th Floor of 379 Thornall Street.(12)
10.40 Sublease Agreement dated July 13, 1996 between Registrant and Palatin
Technologies, Inc.(12)
10.41 Option Agreement dated June 12, 1995 between Registrant and Eli Pines,
Ph.D.*
10.42 Option Agreement dated July 17, 1995 between Registrant and Donald
Fallon.*
10.43 Option Agreement dated December 29, 1995 between Registrant and Eli
Pines, Ph.D.*
10.44 Option Agreement dated May 29, 1996 between Registrant and Robert
Hickey.*
10.45 Option Agreement dated May 29, 1996 between Registrant and Robert
Hickey.*
10.46 Option Agreement dated August 6, 1996 between Registrant and Donald
Fallon.*
10.47 Option Agreement dated August 6, 1996 between Registrant and Donald
Fallon.*
10.48 Option Agreement dated August 15, 1996 between Registrant and Walter
Maupay.*
23.1 Consent of Rubin Baum Levin Constant & Friedman (included in Exhibit
5.1).*
23.2 Consent of Richard A. Eisner & Company, LLP.*
24.1 Power of Attorney (included on signature page hereto).
* Filed herewith.
___________
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-l (File No. 33-94008) declared effective on September 22, 1992.
(2) Incorporated by reference to Registrant's Registration Statement on Form S-
1 (File No. 333-02588) declared effective on May 3, 1996.
(3) [Intentionally left blank].
(4) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended September 30, 1992.
(5) Incorporated by reference to the Registrant's report on Form 10-K for the
year ended December 31, 1993.
(6) Incorporated by reference to the Registrant's report on Form 8-K filed by
the Company on August 12, 1994.
(7) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended September 30, 1994.
(8) Incorporated by reference to the Registrant's report in Form 10-K for the
year ended December 31, 1994.
(9) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended June 30, 1995.
(10) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended September 30, 1995.
(11) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended June 30, 1996.
(12) Incorporated by reference to the Registrant's report on Form 10-Q for the
quarter ended September 30, 1996.
(b) Financial Statement Schedules
All schedules have been omitted because they are not required or not material
or because the required information is included in the financial statements
included elsewhere herein.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
II-3
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remains unsold at the termination of
the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Edison, State of New Jersey, on January 2, 1997.
LIFE MEDICAL SCIENCES, INC.
(Registrant)
By: /s/ ROBERT P. HICKEY
--------------------------------------------
President and Chief Executive Officer
(principal executive officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
hereby severally constitutes and appoints Herbert Moskowitz and Robert P. Hickey
and each of them, his true and lawful attorneys-in-fact and agents, each acting
alone, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement on Form S-3
and all documents relating thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, each
acting alone full power and authority to do and perform each and every act and
thing necessary or advisable to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement, or amendment thereto, has been signed below by the following persons
in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Robert P. Hickey President, Chief Executive Officer and January 2, 1997
- ------------------------- Director (principal executive officer)
Robert Hickey
/s/ Donald W. Fallon Vice President and Chief Financial January 2, 1997
- ------------------------- Officer (principal financial and
Donald W. Fallon accounting officer)
/s/ Herbert Moskowitz Director January 2, 1997
- -------------------------
Herbert Moskowitz
Director January 2, 1997
- -------------------------
Walter Maupay
/s/ Joel L. Gold Director January 2, 1997
- -------------------------
Joel L. Gold
/s/ Irwin M. Rosenthal Director January 2, 1997
- -------------------------
Irwin M. Rosenthal
/s/ Coy Eklund Director January 2, 1997
- -------------------------
Coy Eklund
/s/ Edward A. Celano Director January 2, 1997
- -------------------------
Edward A. Celano
II-5